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Wednesday, October 19, 2016

At long last – after a 3 ½ month shut down of the state’s
Transportation Trust Fund – the New Jersey Legislature has passed and the
Governor has signed a bill increasing the gas tax by 23 cents a gallon.The tax increase will generate more
than $1 Billion in revenue for the Trust Fund, essentially restoring capital
funding levels to where they were before the shutdown.Why was such a massive increase
necessary?Because nearly 30 years
of increasing debt obligations without any new revenue had essentially
bankrupted the whole system.As a
veteran of the many failed attempts to get the gas tax increased over those
years I am happy to see it finally happen, though I have to shake my head that
it needed a complete financial meltdown to spur action.

So, it’s all good, right?Well, not quite.

First, I hate to say it, but it’s not enough money.Although it may be stretched to about
$1.6 Billion a year through debt financing (which brings it own problems), the
huge costs that New Jersey will be facing over the next decade, especially on
the transit side (think Hudson River tunnels) will require more resources.

Second, the Trust Fund mainly finances capital costs, so the
new bill leaves the operations and maintenance side woefully underfunded.Under New Jersey’s wacky transportation
finance system, operations and maintenance costs mainly fall on the state’s
general funds, which have been continually squeezed for a generation.The damage caused on the transit side
was recently documented in the New York
Times(here).On the highway side, routine
maintenance is chronically underfunded, so bridges and highways are allowed to
deteriorate until they are in bad enough condition to require capital
projects.Staff functions which
can’t be sheltered under a capital line item are just left undone.This squeeze will actually be made
worse by the Trust Fund bill, which cuts general fund revenue sources (sales
tax and estate tax) as part of the political price exacted by the Governor.

Third, although a funding bill is a big step forward, it
really should be accompanied by significant transportation reform.Some of the issues that need to be addressed
on the NJDOT side – in my opinion – include better budget control of project
costs, much more emphasis on operations and maintenance (both of these issues
related to the transportation finance system), a renewed connection between
transportation planning and land use planning (which has waned in recent
years), a stronger connection to climate change resilience and other
sustainability issues, and a stronger commitment to collaborative and robust
planning.

I should point out that there are some substantive problems
common in other states that are not
prevalent in New Jersey.One is
transit funding.Although transit
funding is inadequate, especially on the operations and maintenance side, it’s
not because transit is an unwanted houseguest, as it is in many states.New Jersey being a geographically
compact and densely populated state, transit is political popular in all
regions and in the Legislature.Another problem not prominent in New Jersey is overinvestment in highway
capacity increases.Transportation
decision makers decided a long time ago (first explicitly stated in the 1989
Transportation Plan) that New Jersey could not “build its way out of
congestion” and resources have increasingly focused on system preservation, and
especially the bridge program.

A companion bill to the tax bill does, however, offer hope
for the future on these unaddressed issues.It creates a Transportation Policy Review Board, to be
composed of nine public members, all of whom are supposed to have
transportation expertise.The
Board is given a broad mandate to “provide independent analysis of the transportation
capital program, provide comments on the cost effectiveness of the program,
evaluate the condition of the State transportation system, and identify needed infrastructure
investments.”The Board is to have
its own budget and the ability to conduct its own research and to produce its
own reports.(One of the specific
tasks spelled out in the legislation is a study of a VMT tax.)If the Board fulfills its statutory
charter it will become, in effect, a state transportation commission, something
New Jersey has not had since 1948.History instructs us, however, not to assume success (the new Board is
legislatively built on the statutory ruins of a previous failed review board).

The companion bill contains various other provisions, but I
will mention just two: one very good and one very bad.The very good provision requires that
New Jersey DOT set up a monthly online project reporting system – long overdue
– which could become the kernel of a New Jersey Grey Notebook (see Washington State DOT).The really bad provision establishes a Capital Program
Approval Committee with appointees from the Legislature.The Committee is to assure that “legislative
input” is considered in putting together the annual program.The program can’t be adopted until each
member of the Committee approves each project!